Are Perceptions of Corruption Matching Reality? Theory and Evidence from Microdata

44 Pages Posted: 14 Dec 2017 Last revised: 15 Dec 2017

See all articles by Germana Corrado

Germana Corrado

University of Rome, Tor Vergata - Department of Management and Law

Luisa Corrado

University of Rome Tor Vergata Department of Economics and Finance

Giuseppe De Michele

University of Rome Tor Vergata - Department of Economics and Finance

Francesco Salustri

Health Economics Research Centre, University of Oxford

Date Written: July 2017

Abstract

Some criticism has been raised on the actual capability of corruption perception-based indices to gauge the essence of concepts they aim to measure. One can argue that perceptions about corruption are not matching reality and could be the reflection of distorted truth. Based on this evidence we provide a theoretical ground for the corruption decision-making process (objective corruption) and the corruption perception-making process (subjective corruption) which accounts for the role of media attention. From the theoretical model we are able to derive testable implications for the empirical analysis, i.e. whether socio and cultural norms can explain the gap between the two measures of corruption across Europe. We employ a generalised setting of the structural equation models to build latent indices of objective and subjective corruption from our microdata exploiting the information on various economic, geographic and socio-demographic factors that can affect the perception and the experience of corruption practices. The resulting indices allow us to define country rankings for both types of corruption and draw a geopolitical picture of the phenomenon across Europe. We also show that countries where the quality of media is higher are associated with lower differences between perceived and real corruption.

Keywords: Perceived and experienced corruption, Latent variables, Latent multi-dimensional index, Multiple indicators multiple causes models, Generalized SEM MIMIC

JEL Classification: C43, C83, D73, H11, R50

Suggested Citation

Corrado, Germana and Corrado, Luisa and De Michele, Giuseppe and Salustri, Francesco, Are Perceptions of Corruption Matching Reality? Theory and Evidence from Microdata (July 2017). CEIS Working Paper No. 420. Available at SSRN: https://ssrn.com/abstract=3086711 or http://dx.doi.org/10.2139/ssrn.3086711

Germana Corrado

University of Rome, Tor Vergata - Department of Management and Law ( email )

Rome
Italy

Luisa Corrado (Contact Author)

University of Rome Tor Vergata Department of Economics and Finance ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Giuseppe De Michele

University of Rome Tor Vergata - Department of Economics and Finance ( email )

Rome
Italy

Francesco Salustri

Health Economics Research Centre, University of Oxford ( email )

Department of Public Health
Old Road Campus
Oxford OX3 7LF
United Kingdom

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